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UPSCTREE [PRELIMS TEST – PE2 –ECONOMY]

1

PE2- UPSCTREE PRELIMS TEST SERIES

Economy Survey- Part 1, Budget- Part 1 ; Current Events

Q.1) Consider the following statements:-

1)In Asian financial crisis of late 1990s, there was a capital flight from

these countries.

2)In Global financial crisis of 2008, there was a capital inflow in to

United states.

Which of the above statement/s are correct ?

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Asian Financial Crisis (AFC) :- In the AFC of the late 1990s, the transmission

mechanism was similar—namely, overheating and unsustainable external positions

under fixed exchange rates—but the instigating impulse was private borrowing

rather than government borrowing. The troubles in Eastern Europe in 2008 belonged

to this category. The 2013 mini-crises in a number of emerging markets following the

Federal Reserve’s “taper tantrum” were also similar to the Asian crisis, with the

difference that affected countries had more flexible exchange rates which obviated

the large disruptive changes that occur when fixed regimes collapse. Global Financial

Crisis (GFC):- The GFC of 2008, with America as its epicentre, was unique in that it

involved a systemically important country and originated in doubts about its financial

system. The effects radiated out globally, with the irony that even though the

problems originated in the American financial system, there was a flight of capital

toward the United States, which triggered a sharp appreciation of the dollar and

significant currency depreciations in emerging markets. In this way, the GFC, while

inflicting an adverse financial shock on the rest of the world, simultaneously set in

motion an adjustment mechanism that helped emerging markets recover from the

crisis.


2


1)The Japanese crisis was due to corporate lending crisis and did not

have much impact worldwide.

2)The Global financial crisis was triggered by household borrowing

crisis otherwise known as sub-prime mortgage crisis.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:


1)It is believed that crisis in economy is inevitable.

2)The next crisis is predicted to occur due to corporate lending crisis.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:


3


1)India's macro vulnerability index shows that there is increment in


4

macro-economic resilience for the past few years.

2)India is ranked as "BAA" in investment grade.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

India is ranked as "BBB" in investment grade.


1)A 1 percentage point decrease in the world growth rate is now

associated with a 0.42 percentage point decrease in Indian growth

rates.

2)The real GDP growth rate of India is expected to be 7-7.75%


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.6) Consider the following statements with regards to Indian start ups:-

1)In India, the number of start ups (in FY 2016) is more than 15,000.

2)Of the total start ups in India , approximately 50% of the start ups


5

were created in 2015 alone.

3)At least 10 Indian startups belonged to the ‘Unicorn’ club

(valuations greater than $1 billion).


A.

1 ,2 only

B.

2,3 only

C.

1,2,3

D.

1 only

Explanation:

19,400 start ups as yet and of the total start ups in India , approximately 25% of the

start ups were created in 2015 alone.Eight Indian startups belonged to the ‘Unicorn’

club (valuations greater than $1 billion).


1)El-Nino event adversely affects Indian agriculture as it results in

deficient monsoon.

2)La-Nina event , on the contrary results in normal/above normal

rainfall in India.

3)The El-Nino and La-Nina circulation around the equator is called

Walker circulation.


A.

1 and 2 only

B.

2 and 3 only

C.

1,2,3

D.

1 and 3 only


6

Explanation:


1)El-Nino year is usually followed by a La-Nina year.

2)El-Nino occurs when there is warming of Peru current in the west

coast of South America.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Since 1950, there have been 22 El Niño events of varying durations and intensities

but out of the 21 prior to this one, 9 have been followed by La Niña, involving an

abnormal cooling of sea surface waters along the tropical west coast of South

America


1)Indian ocean dipole is a phenomenon where the tropical Indian

Ocean waters near Africa become warmer relative to those around

Indonesia.

2)A positive Indian ocean dipole cancels or minimizes El-Nino effects

on Indian agriculture.


A.

1 only

B.

2 only

C.

Both 1 and 2


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D.

Neither 1 nor 2

Explanation:

The monsoon could also be good due to other favourable factors such as a “positive

Indian Ocean Dipole”. The latter phenomenon – where the eastern tropical Indian

Ocean waters near Africa become warmer relative to those around Indonesia –

prevented at least two El Niño years (1997 and 2006) from resulting in droughts in

India.


1)Indradhanush scheme aims at bank recapitalization in a phased

manner.

2)Indradhanush mission aims at providing immunity against 7

diseases.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:


1)Bound tariffs are specific commitments made by individual WTO

member governments.

2)The bound tariff is the maximum MFN tariff level for a given

commodity line.

3)Bound tariffs are not necessarily the rate that a WTO member

applies in practice to other WTO members' products



8

A.

1 and 2 only

B.

2 and 3 only

C.

1,2,3

D.

1 only

Explanation:

Q.12) When world prices go up or there is domestic scarcity, export

restrictions or bans are imposed; when the reverse happens, import

tariffs are imposed. But this policy volatility actually ends up hurting

farmers (of course) but eventually also consumers. This is because :-

1)Farmers produce more because of the policy volatility which

results in increased domestic availability and hence lower prices.

2)Policy uncertainty dampens, even chills the incentive to produce.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Farmers produce less because of the policy volatility which results in reduced

domestic availability and hence higher prices.


1)Ujjwal Discom Assurance Yojana provides for the financial

turnaround and revival of Power Distribution companies

2)It is mandatory for states to join UDAY scheme within 1 year.


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A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.14) P. J. Nayak Committee was constituted to Review Governance of

Boards of Banks in India that recommended which of the following

:-

1)Scrapping and removal of Bank Nationalisation Acts and SBI Act.

2)Government should transfer its shares of PSBs to Bank investment

Company (BIC), with functional autonomy.

3)Conversion of of PSBs into Companies as per the Companies Act.

A.

1 and 2 only

B.

1 and 3 only

C.

3 only

D.

1,2,3

Explanation:


1)Gyan Sangram is a conclave to revive the Indian education sector.

2)Refinery products are part of eight core industries.



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A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Gyan Sangam” - a conclave of PSBs and FIs to discuss issues of concerns to optimize

governance in banking sector. The eight core sector industries are— coal, crude oil,

natural gas, refinery products, fertilizer, steel, cement and electricity.

Q.16) Which of the countries are put under "Fragile Five" :-

1)Brazil

2)Indonesia

3)Turkey

4)South Africa

5)India

6)Vietnam

7)Philippines

8)Malaysia

A.

1,2,3,4,5

B.

1,2,4,5,7

C.

2,3,5,6,7

D.

1,2,3,4,6

Explanation:

Q.17) Macroeconomic vulnerability index (MVI) has been constructed

which adds together a country's :-

1)Balance of Payment

2)Inflation


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3)Forex

4)Current Account Deficit

5)Fiscal Deficit


A.

2,4,5

B.

1,2,5

C.

2,3,4,5

D.

1,2,4

Explanation:


1)"Chakravyuha" challenge is more a feature of the relatively

traditional sectors of the economy of India

2)"Chakravyuha" challenge describes the policy impediments in India

in case of the exit of the institutions from the economy.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:


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The Charkravyuha legend from the Mahabharata describes the ability to enter but

not exit, with seriously adverse consequences. It is a metaphor for the workings of

the Indian economy in the 21st century, the legacy of several decades of economic

policy making.


1)Minimum support prices (MSPs) were envisioned as an insurance

mechanism for farmers, but have become price floors instead.

2)MSP resulted in favouring some crops in some regions at the

expense of others.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 and 2

Explanation:

Q.20) An increase in the Bank Rate generally indicates that the

A.

Market rate of interest is likely to fall

B.

Central Bank is following a tight money policy

C.

Central Bank is following an easy money policy

D.

Central Bank is no longer making loans to commercial banks

Explanation:

Bank Rate - RBI lends money to its clients for long term loans at this interest rate.


13

Q.21) Which of the following grants/ grant direct credit assistance to

rural households?

1. Regional Rural Banks

2. National Bank for Agriculture and Rural Development

3. Land Development Banks

Select the correct answer using the codes given below:

A.

1 and 2 only

B.

2 only

C.

1 and 3 only

D.

1,2,3

Explanation:

NABARD doesn’t give “direct” credit assistance. It provides credit via intermediaries

such as Microfinance companies, cooperative society, RRB.

Q.22) Consider the following liquid assets:

1. Demand deposits with the banks

2. Time deposits with the banks

3. Savings deposits with the banks

4. Currency

The correct sequence of these decreasing order of Liquidity is

A.

1-4-3-2

B.

4-3-2-1

C.

2-3-1-4


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D.

4-1-3-2

Explanation:

Q.23) In the context of Indian economy, Open Market Operations refers to

:-

A.

borrowing by scheduled banks from the RBI

B.

lending by commercial banks to industry and trade

C.

purchase and sale of government securities by the RBI

D.

None of the above

Explanation:

Q.24) Priority Sector Lending by banks in India constitutes the lending

to

A.

agriculture

B.

micro and small enterprises

C.

weaker sections

D.

All of the above

Explanation:

Q.25) Supply of money remaining the same when there is an increase in

demand for money, there will be

A.

a fall in the level of prices

B.

an increase in the rate of interest

C.

a decrease in the rate of interest


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D.

an increase in the level of income and employment

Explanation:

Q.26) Which of the following constitute Capital Account?

1. Foreign Loans

2. Foreign Direct Investment

3. Private Remittances

4. Portfolio Investment

Select the correct answer using the codes given below.

A.

1, 2 and 3

B.

1, 2 and 4

C.

2, 3 and 4

D.

1, 3 and 4

Explanation:

Q.27) Which one of the following groups of items is included in India’s

foreign-exchange reserves?

A.

Foreign-currency assets, Special Drawing Rights (SDRs) and loans

from foreign countries

B.

Foreign-currency assets, gold holdings of the RBI and SDRs

C.

Foreign-currency assets, loans from the World Bank and SDRs

D.

Foreign-currency assets, gold holdings of the RBI and loans from

the World Bank

Explanation:

India’s foreign exchange reserves is made up of Foreign currency assets (FCA) (US


16

dollar, euro, pound sterling, Canadian dollar, Australian dollar and Japanese yen etc.)

gold special drawing rights (SDRs) of IMF Reserve tranche position (RTP) in the

International Monetary Fund (IMF)

Q.28) Consider the following statements:

1. Inflation benefits the debtors.

2. Inflation benefits the bond-holders.

Which of the statements given above is/are correct?

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Inflation redistributes wealth from creditors to debtors i.e. lenders suffer and

borrowers benefit out of inflation. Bond holders lend money (to debtor) and received

bond in return so he suffers.

Q.29) A rise in general level of prices may be caused by

1. an increase in the money supply

2. a decrease in the aggregate level of output

3. an increase in the effective demand


A.

1 only

B.

1 and 2 only


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C.

2 and 3 only

D.

1, 2 and 3

Explanation:

Q.30) Which one of the following is likely to be the most inflationary

in its effect?

A.

Repayment of public debt

B.

Borrowing from the public to finance a budget deficit

C.

Borrowing from banks to finance a budget deficit

D.

Creating new money to finance a budget deficit

Explanation:

Q.31) Economic growth in country X will necessarily have to occur if

A.

there is technical progress in the world economy

B.

there is population growth in X

C.

there is capital formation in X

D.

the volume of trade grows in the world economy

Explanation:

Internally capital formation takes place when a country does not spend all its current

income and consumption, but saves a part of it and uses it for investment for

increasing further production. This act of saving and investment is described as

capital accumulation or capital formation.

Q.32) To obtain full benefits of demographic dividend, what should India

do?

A.

Promoting skill development


18

B.

Introducing more social security schemes

C.

Reducing infant mortality rate

D.

Privatization of higher education

Explanation:

Q.33) Which of the following forms part of new categories added in the

priority sector since 2015?

1)Medium Enterprises

2) Social Infrastructure

3) Renewable Energy

4)Handicraft

5)Agriculture allied services

A.

1,2,3 only

B.

2 and 3 only

C.

2,3,5 only

D.

3 and 5 only

Explanation:

Categories of the priority sector: Medium Enterprises, Social Infrastructure and

Renewable Energy will form part of priority sector, in addition to the existing

categories. Categories under priority sector Agriculture Micro, Small and Medium

Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy

Others


1)The government spends nearly 7 per cent of GDP subsidising

various commodities and services.

2)The ratio of taxpayers to voters in India is only about 9 percent

that is for every 100 voter , only 9 people pay tax.


19

Which of the above statement/s are correct

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

The ratio of taxpayers to voters in India is only about 4 percent, whereas it should be

closer to 23 percent.The government spends nearly 4.2 per cent of GDP subsidising

various commodities and services.


1)A free trade agreement is a preferential arrangement in which

members reduce tariffs on trade among themselves, while

maintaining their own tariff rates for trade with nonmembers

2)A customs union (CU) is a free-trade agreement in which members

apply a common external tariff (CET) schedule to imports from

nonmembers.

3)A common market is a customs union where movement of factors

of production is relatively free amongst member countries.

4)An economic union is a common market where member countries

coordinate macro-economic and exchange rate policies.


A.

1 and 2 only

B.

2,3,4 only

C.

1 and 4 only

D.

1,2,3,4

Explanation:


20


1)Informal firms in India account for most employment growth and

nearly all the increase in the number of establishments since 1989.

2)The Formal sector in India created more than half of the jobs in

Manufacturing Since 1989.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Of the 10.5 million new manufacturing jobs created between 1989 and 2010, only 3.7

million—about 35 per cent—were in the formal sector


1)The Indian Railways is one of the largest transportation networks

in the world and consumes 7 per cent of the country’s total

electricity consumption.

2)The electricity bill of railway amounts to 25% of its total budget

per annum.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2


21

Explanation:

The Indian Railways (IR), one of the largest transportation networks in the world,

consumes 17.5 billion units of energy (1.7 per cent of the country’s total electricity

consumption.

Q.38) Consider the following provisions and find out the correct ones with

respect to Ujwal DISCOM Assurance Yojana :-

1)States shall take over 75 per cent of discom debt outstanding till

date and take over future losses of discoms in a phased manner.

2)Reduction of Aggregate Technical & Commercial (AT&C) losses to

15 per cent by 2018-19.

3)Increased supply of domestic coal to substitute for imported coal.

4)Banks/FIs have to advance short term debt to discoms for

financing losses.

A.

1 and 2 only

B.

1,2,3 only

C.

3 and 4 only

D.

1 and 3 only

Explanation:

Ujwal DISCOM Assurance Yojana (UDAY) 1. States shall take over 75 per cent of

discom debt outstanding as of September 2015. 2. Reduction of Aggregate Technical

& Commercial (AT&C) losses to 15 per cent by 2018-19. 3. Reduction in difference

between average cost of supply and average revenue realized (ARR) by 2018-19. 4.

Increased supply of domestic coal to substitute for imported coal. 5. States shall take

over future losses of discoms in a phased manner. 6. Banks/FIs not to advance short

term debt to discoms for financing losses


1)The recent growth revival in India is predominantly export-driven

2)Private consumption has strengthened in the current year in India.


22


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

The recent growth revival in India ispredominantly consumption-driven


1)Indian economy never had an year of net export surplus since

independence.

2)There is trend emerging in household expenditure where it is

observed that there is a decline of household

investment in construction activities and realignment of household

expenditures in favour of consumption


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Since 1950-51, India has had only seven years of marginal net export (exports minus

imports of goods and nonfactor services) surpluses; and never since 1993-94

Q.41) With reference to Marginal Cost of Funds based leading rate (MCLR),


23

which of the following statement(s) is/are correct?

1. It takes into account the Negative carry cost on CRR.

2. It is to be reviewed every month

Select the answer using the codes given below

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.42) With reference to Economic Survey 2015-16, which of the following

statement(s) is/are correct?

1. Small saving schemes have hindered the transmission of

monetary policy in the recent years.

2. The return on small savings scheme has been higher than

bank deposits.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.43) With reference to Credit Impulse, which of the following statements

is/are correct?

1. The concept is developed by Deutsche Bank economist


24

Michael Briggs (2008).

2. Investment increases with increase in credit impulse.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.44) With reference to Economic Survey 2015-16, bank credit growth is

declining because which of the following reasons?

1. Twin Balance Sheet syndrome.

2. Indian companies going for ECB and Bond Market.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.45) With reference to Liberal Remittance Scheme, which of the following

statements is/are correct?

1. Indian residents can send $2.5 lakh per year per person

abroad.

2. It is applicable to both for current as well as capital account

transactions.


25


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.46) With reference to Economic Survey 2015-16, high real interest rate

can have which of the following effects on deposits?

1. Substitution effect.

2. Wealth effect.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.47) With reference to Economic Survey 2015-16, which of the following


1. Both Deposit and Credit growth are declining since 2014.

2. Generally when the real interest rate decreases then the

deposit growth rate increases and vice versa, however since

2014 it is not happening so.



26

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.48) With reference to Bank Rate, which of the following statements

is/are correct?

1. It is the rate at which banks borrow from RBI without any

collateral.

2. Bank rate must always be equal to the Marginal Standing

Facility.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.49) With reference to Bank Board Bureau, which of the following


1. Financial Services Secretary will be one of its members.

2. Governor of RBI will be the ex-officio chairman.


A.

1 only


27

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.50) With reference to Insolvency and Bankruptcy Code, 2015, which of

the following statements is/are correct?

1. Insolvency and Bankruptcy Board will consist of 10 members

solely from RBI.

2. Under this code settlement needs to be done within 180 days.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.51) With reference to SARFAESI ACT, 2002, which of the following


1. It is not applicable to Agriculture loan.

2. Only banks and housing finance-NBFC can do the recovery

under this act.


A.

1 only

B.


28

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.52) Which of the following corrective actions are suggested by

Economic Survey 2015-16 to deal with the NPAs of the Public Sector

Banks?

1. Rectification

2. Recovery

3. Restructuring

Select the correct answer

A.

1 only

B.

1 and 3 only

C.

2 and 3 only

D.

All of the above

Explanation:

Q.53) Bollgard technology is associated with which of the following crops?

A.

Wheat

B.

Rice

C.

Cotton

D.

None of the above

Explanation:

Q.54) The Delhi-Mumbai Industrial Corridor will pass through which of the

following states


29

1. Uttar Pradesh

2. Rajasthan

3. Haryana

4. Gujarat


A.

1 only

B.

1 and 3 only

C.

2 and 4 only

D.

All of the above

Explanation:

Q.55) With reference to Nilgai, which of the following statements is/are

correct?

1. The nilgai is indigenous to the Indian subcontinent.

2. The nilgai is categorised as Least Concern by the IUCN.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.56) With reference to Global Slavery Index 2016, which of the following


1. It is released by Australia based human right group, Walk Free

Foundation.


30

2. India has the distinction of having the highest number of

people in the world trapped in modern slavery.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.57) With reference to CERN, which of the following statements is/are

correct?

1. It is the world’s largest body of experts in nuclear and

particle physics, where scientists and engineers are probing the

fundamental structure of universe by using the most sophisticated

scientific instruments and advanced systems.

2. CERN is the birthplace of “www” (World Wide Web).


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.58) . With reference to Blood groups, which of the following statements

is/are correct?

1. The main reason behind the difference in blood of human is

the glycol-protein which is found in RBC called antigen.

2. Apart from blood groups – O, A, B and AB, there is a special


31

type of blood group (hh).


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.59) Which of the following are the parts of core industries used to

calculate the IIP?

1. Natural Gas

2. Refinery Products

3. Cement

4. Steel


A.

1 only

B.

1 and 3 only

C.

2 and 4 only

D.

All of the above

Explanation:

Q.60) Global Burden on Food borne disease report is published by which

of the following agencies?

A.

FAO

B.

IMF


32

C.

WHO

D.

None of the above

Explanation:

Q.61) With reference to Clean Energy Ministerial (CEM), which of the

following statements is/are correct?

1. It is a high-level global forum to share lessons learnt and best

practices, and to encourage the transition to a global clean

energy economy.

2. CEM is the initiative of the India.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Explanation: • Clean Energy Ministerial (CEM) is a high-level global forum to share

lessons learnt and best practices, and to encourage the transition to a global clean

energy economy. Initiatives are based on areas of common interest among

participating Governments and other stakeholders. • CEM is the initiative of the USA.

Presently, 23 countries are members of CEM. There are 13 initiatives under CEM

covering energy efficiency, clean energy supply and cross cutting areas. • Since its

launch in 2010, the Clean Energy Ministerial (CEM) has come a long way. Its various

initiatives were instrumental in leading significant collaborative work amongst

members in context of clean energy supply, demand side management and relevant

cross cutting issues. • During the 7thClean Energy Ministerial the Minister for Science

& Technology and Earth Sciences will also launch the Global Cooling Challenge.


33

Q.62) With reference to Philae, which of the following statements is/are

correct?

1. It is a robotic European Space Agency lander.

2. It accompanied the Rosetta spacecraft until it landed on

comet 67P/Churyumov–Gerasimenko.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.63) With reference to Dawn, which of the following statements is/are

correct?

1. It is a space probe launched by European Space Agency.

2. It was launched with the mission of studying two of the

three known protoplanets of the asteroid belt, Vesta and Ceres.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Explanation: Dawn is a space probe launched by NASA in September 2007 with the

mission of studying two of the three known protoplanets of the asteroid belt, Vesta

and Ceres. It is currently in orbit about its second target, the dwarf planet Ceres.


34

Q.64) With reference to The Hague Code of Conduct, which of the

following statements is/are correct?

1. It is a global ballistic missile proliferation regime established

in 2002.

2. It is a voluntary legally non-binding multilateral body


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Explanation: About HCoC: HCoC is a global ballistic missile proliferation regime

established in 2002. It is a voluntary legally non-binding multilateral body aimed at

preventing the spread of ballistic missiles that can deliver weapons of mass

destruction. • It is the only multilateral code in the area of disarmament which has

been adopted over the last years. It is the only normative instrument to verify the

spread of ballistic missiles. • The HCOC does not ban ballistic missiles, but it does call

for restraint in their production, testing, and export. Presently, there are 137

signatories. • The Code is meant to supplement the Missile Technology Control

Regime (MTCR) but its membership is not restricted. Under the Code, States make

politically binding commitments to curb the proliferation of WMD-capable ballistic

missiles and to exercise maximum restraint in developing, testing, and deploying

such missiles. • Given the similarities between the technologies used in ballistic

missiles and civilian rockets, the Code also introduces transparency measures such as

annual declarations and pre-launch notifications regarding ballistic missile and space

launch programs. • Austria is the administrative Central Contact of the Code,

coordinating the information exchange under HCOC.

Q.65) Universal Health Coverage (UHC) index is published by which of the

following agencies?

A.

World Economic Forum


35

B.

IMF

C.

World Bank

D.

None of the above

Explanation:

Explanation: The Universal Health Coverage (UHC) index has been developed by the

World Bank to measure the progress made in health sectors in select countries of the

World. India ranks 143 among 190 countries in terms of per capita expenditure on

health ($146 PPP in 2011). It has 157th position according to per capita government

spending on health which is just about $44 PPP. India’s performance on the indicator

on treatment of diarrhoea needs improvement in terms of enhancing the coverage.

The impoverishment indicator reflects the financial risk protection coverage, with a

higher percentage reflecting better coverage.

Q.66) Consider the following statements with reference to green

revolution.

1. India had surpassed USA in wheat production.

2. India had surpassed China in productivity of wheat and rice.

3. India’s average yield is higher than the world average.

Select the correct option using the codes given below.

A.

1 only

B.

2 and 3 only

C.

1 and 3 only

D.

1, 2 and 3

Explanation:

Q.67) Consider the following statements and find out the correct one.

1. The social return in case of paddy is higher than the private

return.


36

2. The private return in case of pulses is higher than the social

return

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

The returns on growing wheat, sugarcane or paddy, taking account of the negative

externalities from using chemical fertiliser (soil depletion and health), water (falling

water tables), and from burning crops (adverse health consequences) is referred as

social returns of production which is very low in case of paddy but the private return

is higher as it considers only yield which do not consider negative externalities. But

the social returns to pulse production is higher than the private returns, because it

not only uses less water and fertiliser but fixes atmospheric nitrogen naturally and

helps keep the soil porous and well aerated because of its deep and extensive root

systems. These positive social benefits should be incorporated into MSP estimates

Q.68) Which of the following departments is/are not under ministry of

finance?

1. Department of economic affairs.

2. Department of expenditure

3. Department of revenue

4. Department of financial services

5. Department of disinvestment

Select the correct answer using the code given below.

A.

3 only

B.

3 and 5 only


37

C.

3, 4 and 5 only

D.

None of the above

Explanation:

Q.69) Consider the following statements

1. Effective Revenue Deficit, a refined version of Revenue Deficit

captures the shortfall in current receipt over current

expenditure.

2. Effective Revenue Deficit is equal to the difference between

the Revenue Deficit and grants given for the creation of

capital asset.

Select the correct answer using the code given below

A.

1 only.

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.70) Which of the following is not considered as non-debt creating

capital asset?

1. Foreign direct investment

2. Borrowing from RBI

3. External assistance

4. Borrowing from IMF


A.

1 and 4 only.

B.

1, 2 and 4 only


38

C.

1,2,3 only

D.

1,2,3,4

Explanation:

Q.71) Which of the following was not a part of National telecom policy,

2012?

1. All India mobile number portability.

2. National optical fiber network

3. Money will be contributed by the spectrum winning

companies to create universal service obligation fund for rural

and Naxal areas

A.

1 only.

B.

1 and 3 only

C.

2 and 3 only

D.

1, 2 and 3.

Explanation:

Q.72) The Trans-Atlantic trade and Investment Partnership is an example

of:-

A.

FTA

B.

PTA

C.

Multilateral trade Agreement

D.

Common Market

Explanation:

Q.73) Consider the following statements.


39

1. Micro irrigation practices increases the requirement of

fertilizers.

2. All the three existing earlier irrigation schemes – the

Accelerated Irrigation Benefit Programme (AIBP), Integrated

Watershed Management Programme (IWMP) and On Farm

Water Management (OFWM) are merged into the Prime

Minister’s Krishi Sinchayi Yojana (PMKSY)


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

. Micro irrigation practices decreases the requirement of fertilizers

Q.74) Consider the following statements and find out the correct one.

A.

Currently India's share is 2% of world exports

B.

It has a target to reach 3.5 % by 2020.

C.

Both of the above

D.

None of the above

Explanation:

Q.75) Baltic Dry Index is associated with

A.


40

Cost of transportation of raw material by sea.

B.

Transportation of raw material through Baltic Sea

C.

The negative externalities associated with shipping.

D.

None of the above.

Explanation:

the Baltic Dry Index (BDI) is an economic indicator issued daily by the London-based

Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an

assessment of the price of moving the major raw materials by sea.

Q.76) With reference to PRASAD consider the following statements.

1. It is an initiative under the ministry of urban development.

2. It will be funded equally by both center and state.

3. It will be executed by SPVs, PWD, NGOs etc.

Select the correct option using the codes given below.

A.

1 only

B.

3 only

C.

1 and 2 only

D.

1,2 and 3

Explanation:

It is an initiative under the ministry of tourism. Funding- 100% CSS

Q.77) With reference to development of industrial corridors consider the

following.

1. Amritsar- Kolkata : Cental government

2. Delhi- Mumbai: Japan


41

3. Mumbai- Bangalore : Britain

4. Banglore- Chennai : Britain


A.

1 and 4 only

B.

1, 2 and 3 only

C.

1, 2 and 4 only

D.

1, 2, 3 and 4

Explanation:

Q.78) Madrid protocol deals with which of the following?

A.

Foreign trade of Narcotics

B.

IPR protection

C.

Funding for infrastructure development.

D.

Multilateral trade agreement.

Explanation:

Q.79) A country is said to be in debt trap if

A.

It has to abide by the conditions imposed by the IMF.

B.

It has to borrow to make interest payment.

C.

It has been refused loans by creditors.

D.

When declared so by IMF by considering its junk status.


42

Explanation:

Q.80) Which of the following are the objectives of Commission of

Agricultural prices?

1. To stabilize agricultural prices

2. To ensure meaningful real income level to the farmers.

3. To protect the interest of the consumers by providing

essential agricultural commodities at reasonable rates

through public distribution system

4. To ensure maximum price for the farmers


A.

1, 2 and 3 only

B.

1, 2 and 4 only

C.

1, 3 and 4 only

D.

2, 3 and 4 only

Explanation:

Q.81) The price of any currency in international market is decided by the

1. IMF

2. Demand for goods and services provided for the by the

country concerned.

3. Stability of the government of the concerned country.

4. Economic potential of the country

Select the correct answer using the codes given below

A.

1, 2 only

B.

2 and 4 only

C.

3 and 4 only

D.


43

2, 3 and 4 only

Explanation:

Q.82) Consider the following statements.

1. Metals and Minerals Trading Corporation of India, is one of

the two highest earners of foreign exchange for India.

2. It is not involved in any import activities.

3. It is the largest international trading company of India


A.

1 only

B.

1 and 3 only

C.

2 and 3 only

D.

1, 2 and 3

Explanation:

MMTC also imports important commodities such as ferrous and nonferrous metals

for industry, and agricultural fertilizers.

Q.83) Most favoured nation clause under WTO implies

A.

Most favour to some countries

B.

Most favour to all countries

C.

No favour to some countries

D.

No particualr favour to any country

Explanation:

Most-favoured-nation (MFN): treating other people equally - Under the WTO


44

agreements, countries cannot normally discriminate between their trading partners.

Grant someone a special favour (such as a lower customs duty rate for one of their

products) and you have to do the same for all other WTO members.

Q.84) Assertion(A)- Currency Devaluation will lead to improvement in

balance of trade.

Reason(B)- Devaluation will lead to increase in prices of export

A.

Both A and B are individually true and B is the correct explanation

of A.

B.

Both A and B are individually true but B is not the correct

explanation of A.

C.

A is true but B is false.

D.

A is false but B is true

Explanation:

Q.85) In the context of Indian economy, which of the following is/are

purposes of ‘statutory Reserve Requirement’?

1. To enable the central bank to control the amount of

advances the banks can create.

2. To make the peoples deposit safe and liquid.

3. To prevent the commercial banks from making excessive

profits.

4. To force the banks to have sufficient vault cash to meet their

day-to-day requirement.


A.

1 only

B.

1 and 2 only

C.

1, 2 and 4 only

D.


45

1, 2, 3 and 4 only

Explanation:

Q.86) Assertion- India is having very less agricultural productivity.

Reason- Disguised employment is present in India

A.

Both A and B are individually true and B is the correct explanation

of A.

B.

Both A and B are individually true but B is not the correct

explanation of A.

C.

A is true but B is false.

D.

A is false but B is true

Explanation:

Agricultural productivity is less in India due to lack of mechanization and inadequate

adaptation of advanced methods of agriculture not due to disguised employment

Q.87) Which of the following is true about Laffer curve?

A.

It is the relationship between unemployment and growth rate of

GDP of the country.

B.

It is the relationship between the Inflation and the trend in

changes of labour pattern

C.

The Laffer curve shows the relationship between tax rates and tax

revenue collected by governments

D.

None of the above.

Explanation:

The Laffer curve, invented by Arthur Laffer, shows the relationship between tax rates

and tax revenue collected by governments.


46

The curve suggests that, as taxes increase from low levels, tax revenue collected by

the government also increases. It also shows that tax rates increasing after a certain

point (T*) would cause people not to work as hard or not at all, thereby reducing tax

revenue. Eventually, if tax rates reached 100% (the far right of the curve), then all

people would choose not to work because everything they earned would go to the

government.

Q.88) If there is a significant fall in Baltic dry Index for a continued period

of time , which of the following inferences can be true ?

A.

The world economy will soon face recession

B.

The world economy is growing

C.

The European countries only are facing recession

D.

The European market has the strongest demand with respect to

the world.

Explanation:

Q.89) Which of the following is/are part of National Sample survey Office

(NSSO)?

1. Survey Design and Research Division (SDRD)

2. Field Operations Division (FOD)

3. Economic analysis Division (DPD)


47

4. Co-ordination and Publication Division (CPD)

Select the correct answer using the codes given below

A.

1 and 4 only.

B.

2 and 3 only

C.

1, 2 and 4 only

D.

1, 2, 3 and 4.

Explanation:

Q.90) Amortisation refers to :-

A.

Payment of a loan by installments

B.

It is a form of arbitration between service provider and consumer

C.

It is theory that deals with the paradox of economic fundamentals

D.

It refers to the concept where economic bubbles and recession

are byproducts of capitalism

Explanation:

Q.91) Antitrust refers to :-

A.

It is a government policy for dealing with monopoly

B.

It is a government policy for dealing with dumping

C.

It is general trend observed between competitiors

D.

It is an agreement between the public and private sector

companies

Explanation:

Q.92) Consider the following statements :-


48

1)Hawala is an ancient system of moving money based on trust

2) It predates the banking practices.

3)In contemporary times it is usually associated with the Middle East

region

4)In Hawala , the money movement is physical

Which of the above statement/s are true ?

A.

1,2,3 only

B.

1,2,3,4

C.

1 and 3 only

D.

2 and 4 only

Explanation:

Hawala An ancient system of moving money based on trust. It predates western bank

practices. Although it is now more associated with the Middle East, a version of

hawala existed in China in the second half of the Tang dynasty (618-907), known as

fei qian, or flying money. In hawala, no money moves physically between locations;

nowadays it is transferred by means of a telephone call or fax between dealers in

different countries. No legal contracts are involved, and recipients are given only a

code number or simple token, such as a low-value banknote torn in half, to prove

that money is due. Over time, transactions in opposite directions cancel each other

out, so physical movement is minimised. Trust is the only capital that the dealers

have. With it, the users of hawala have a worldwide money-transmission service that

is cheap, fast and free of bureaucracy.From a government's point of view, however,

informal money networks are threatening, since they lie outside official channels that

are regulated and taxed. They fear they are used by criminals, including terrorists.

Although this is probably true, by far the main users of hawala networks are overseas

workers, who do not trust official money transfer methods or cannot afford them,

remitting earnings to their families.

Q.93) Hedge or Hedging in economic terms refers to :-

A.

Reducing the risks by risk diversification


49

B.

Investing in bigger risk as it pays better returns

C.

Investment in smaller risks to be recession proof

D.

None of the above

Explanation:

Q.94) Herfindahl-Hirschman index refers to :-

A.

It is an warning signal of Monopoly

B.

It is an warning signal of recession

C.

It is an index of structural weaknesses of a country

D.

It is an index of vulnerability of country's economy to

environmental fluctuations and hazards

Explanation:


1)Human capital is what enables people to earn a living

2)Human capital can be increased by investing in education, training

and health care.

Which of the above statements are correct ?

A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:



50

1)Laissez-Faire Is "Let-It-Be Economics": The Belief That An Economy

Functions Best When There Is No Interference By Government

2)Keynesian Is A Branch Of Economics, Based, Often Loosely, On

The Ideas Of Keynes, Characterised By A Belief In Active Government

And Suspicion Of Market Outcomes.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.97) Kleptocracy refers to :-

A.

Red Tapism by bureacucracy

B.

Bureaucracy induced policy paralysis leading to collapse of

economy

C.

Corrupt, Thieving Government, In Which The Politicians And

Bureaucrats In Charge Use The Powers Of The State To Feather

Their Own Nests

D.

None of the above

Explanation:


1)Mercantilism is an economic theory where the Mercantilists fear

that MONEY would become too scarce to sustain high levels of

OUTPUT and employment; their favoured solution was cheap money

(low INTEREST rates)

2)Monetarism school of economic thought believes that if one


51

controls the MONEY SUPPLY, the rest of the economy will take care

of itself.


A.

1 only

B.

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

Q.99) If the central bank doubles money supply :-

A.

The prices of commodities will rise

B.

The prices of commodities will decline

C.

The prices of commodities will remain unchanged

D.

None of the above

Explanation:


1)Money illusion refers to a concept when people are misled by

INFLATION into thinking that they are getting richer, when in fact

the value of MONEY is declining.

2)A small amount of inflation may not be a bad thing and could

even be beneficial, helping to “grease the wheels” of the economy

and it is usually desired.


A.

1 only

B.


52

2 only

C.

Both 1 and 2

D.

Neither 1 nor 2

Explanation:

pe2- upsctree prelims test series€¦ · upsctree [prelims test – pe2 –economy] 1 pe2-...

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